A plan for doctor family.

I am a 35-year-old doctor and have my own practice. My wife, 33, is employed in a hospital. We have a son and daughter aged 6 and 4, respectively. We have medical policy for ?5 lakh and term insurance for ?50 lakh each.

We have taken children policy for their education and want to send them abroad for graduation.

Hassan

To provide overseas education for your children, you need to modify your current asset allocation in line with your risk appetite. We suggest you follow asset allocation of 60:40 in equity and debt.

To meet your children’s education cost fully through savings, you need to save ?1.02 lakh every month. The present value of ?1 crore, for your son’s education, if inflated at 7 per cent over the next 12 years, will be ?1.8 crore. You need to save ?56,300 every month; this should earn 12 per cent return.

However, if you wish to fund 50 per cent of the cost from your savings and the balance through education loan, the amount you need to save every month will be proportionately lower.

For your daughter’s education you will need ?1.98 crore, for which you need to invest ?45,800 for the next 14 years.

Your insurance policies may not be very helpful for your son’s education since the payouts happen at an interval of two years once he turns 18. It may be partly helpful for your daughter’s education.

You need to save more to set up your own clinic. Given your aspiration to provide overseas education for your children, there may be no surplus available to meet this goal. But you can consider ‘doc loan’ offered by banks. However, you need to plan your finances to meet loan obligations until the time your clinic scales up. Increase your term insurance cover to ?3 crore.

The writer is a financial planner and founder of myassetsconsolidation.com. Send your queries to blinefp@gmail.com